Directorate General for Internal Market, Industry, Entrepreneurship and SMEs. Thomas Nowak has more than 15 years of experience in the field of renewable energy. Currently, he is responsible for the management and development of the Brussels-based European Heat Pump Association (EHPA), an industry lobby group with more than 110 members. He is also a board member of the EU Renewable Heating and Cooling Platform and a contributor to scientific publications including the IEA energy technology perspectives and the REN21 Renewables Global Status Report. Thomas holds a degree in business administration from the University of Paderborn, Germany.
What are the main current trends on the heat pump market in Europe?
Heat pumps are an established technology for heating and cooling as well as hot water production in many EU countries. In some countries, like Norway, Sweden, and Finland heat pumps are the dominant heating technology. In others, like Denmark, Switzerland, France or Austria, heat pumps are aspiring to move into that position. In a third group, with Germany being the prime example, heat pump technology has achieved a significant share in the new build market segment.
This flashlight on sales numbers reflects the characteristics of heat pumps. The technology is mature and ready for most application areas. Technological progress has increased the range of possible applications. In countries with sufficient time for market development and/or proper framework conditions, heat pumps have become a key heating and cooling technology.
Looking at the technology itself, a few trends are visible:
- The large majority of units (>80%) are using air as their heat source.
- Sanitary hot water heat pumps show the fastest growth. They help introduce renewable energy into traditional boiler installations.
- Connectivity is becoming more and more important. Improved interfaces integrate heat pumps into home energy management systems and connect them in particular to PV systems.
- The number of large heat pumps is increasing. In buildings with a dual use for heating and cooling heat pumps offer the highest efficiency. Bespoke heat pump solutions are the de-facto standard.
In terms of efficiency, the technology has made huge developments. Where, in the past, one could argue that achievable efficiencies of air source heat pumps were much lower than those of geothermal or hydrothermal units, this gap has been closed. The best air source heat pump systems perform as well as average geothermal or hydrothermal units with the latter on average still being the most efficient heat pump type in the market. However independent of energy source and application area, proper system design is key for efficient systems.
The EU presented a strategy for heating and cooling earlier this year. What role do you see heat pumps playing in this strategy?
With a 100% decarbonisation target in mind for 2050, heat pumps can be considered nothing less than essential to the heating and cooling strategy. They are unique in using renewables and increasing energy efficiency at the same time, thus reducing CO2 emissions. On top, the technology enables a sector connection between electricity and heating. New business models make using the inherent demand response and storage potential of heat pumps feasible, contributing to stabilised high-res electric grids. Whenever heating and cooling services are needed in parallel, heat pumps are the most efficient technology.
Looking at the five dimensions of the European Energy Union, heat pumps contribute to all of them. In addition to the already mentioned benefits, they are installed by local installers – thus providing employment and supporting SME’s. For many segments, Europe is a market leader. The underlying skill set in the R&D department of companies and in university-based research should be supported further by public programs. Last but not least, heat pumps use locally available ambient energy and thus reduce import dependency, providing full supply security and avoiding spending on energy imports.
Figure 1: HP benefits to the Energy Union
What do individual heat pumps have to offer the European consumer in terms of their environmental and economic performance compared to conventional heating solutions?
Heat pumps work – they provide efficient heating, cooling and hot water to the individual customer and thus ensure comfortable and healthy buildings. Heat pumps also help improving indoor and outdoor air quality.
With regards to the economic performance, the assessment depends very much on the national conditions. The constantly increasing efficiency requirements in national building codes make it more and more difficult to meet them for the construction of new buildings by installing a traditional boiler alone.
For this market segment, heat pump investment costs are very similar to heating systems combining fossil and renewable energy. In consequence, heat pumps have a significant, if not majority share of the new build market in many EU countries.
For the replacement market, the comparatively low cost of a traditional boiler needs to be compared with the investment cost of a modern system – which are still higher. While the renovation market is the largest and thus most promising market segment, it needs improved solutions at a lower price point and skilled installers / planners to copy heat pump success in this market.
With NZEB (nearly zero-energy building) requirements soon becoming mandatory in public and private buildings and with an extension of efficiency requirements also to the renovation segment, the field of possible heat pump installations is bound to increase.
This and the outstanding performance of current hybrid heat pumps should fuel the market uptake of the technology.
Has R&D funding in Europe been sufficient to allow heat pumps reach their potential as a bridging technology between electricity and heat, facilitating the integration of more renewables into the grid? What are the research priorities in this regard?
The latest trends in funding for R&D in Europe have shown that both at EU and national level, policy-makers have started to recognize the importance of heat pump technology for a decarbonised building sector and for the use of more renewables in electricity and heating and cooling production.
This development needs to continue. The industry will require a constant and predictable funding level. Funding should no longer focus on components and products but on systems optimisation and integration connecting heating and the electricity sector.
Heat pumps using 100% renewable electricity provide emission-free heating and cooling today. With appropriate design, heat pump systems can store surplus electricity and overcome peaks for hours or even days, thus providing meaningful peak shaving to the grid.
While this potential is available in principle, only a minority of systems are designed to make use of it in the most optimal way. We do observe a mismatch between technical and realised potential. This could be overcome in two ways:
- Using heat pumps for sector connection should be made subject to research projects in Horizon 2020 and beyond, focusing on systems integration including improved controls, interfaces and storage technology.
- Updating the electricity market design to encourage utilities to offer cost flexible pricing to end-users and aggregators. Providing an economic benefit in exchange for the grid stabilisation services of heat pumps will make designing such systems attractive.
Heat pump systems that are optimised in this way can also increase the on-site use of auto produced electricity, for example from a PV generator.
In terms of research priorities EHPA believes that R&D should prioritise funds for:
- The development of easy replacement options for the renovation segment.
- Efficient solutions for heating and cooling in industrial processes and commercial applications.
- Home systems with the integration of HP and PV power plants for (near) 100% green heating and cooling solutions.
R&D funding programs should focus on helping Europe realise the necessary fuel switch towards renewable energy. Technologies are available, but often still face non-technical deployment barriers. Overcoming these obstacles should be a key pillar of Europe’s R&D programs.
How do national heat pump markets compare across Europe? Are there frontrunners from which policy lessons can be learned that might be applied to the European market in general?
As touched upon in the first question, the EU markets have quite a heterogeneous development status and speed. 10 EU markets represent 90% of all heat pumps sold in Europe.
Figure 2: Heat pump sales in 21 European countries
The highest market penetration per 1000 households is found in the Nordic countries. Heat pump markets have benefitted from:
- A lack of extensive gas distribution grids;
- A forward looking ban of the use of heating oil;
- The acceptance of (efficient) use of electricity for heating purposes.
A new challenge will be the large share of wind and PV electricity in the electric grids. Simulations for countries like Denmark, with a planned wind share in the power mix exceeding 50%, show that heat pumps will become essential for grid stability.
The biggest market with the strongest growth rate is France. Efficient heat pumps are part of the national heat strategy. As they multiply the efficiency of every kilowatt-hour of electricity by a factor of 3-4, they are a fast track solution towards reducing France’s electricity demand.
There are many takeaways that can be transferred from these markets to the rest of Europe. It will however be essential for governments that want to make heat pumps a success in their markets to correct market imperfections (if not failures) in the heating market to make the technology economically attractive to end-users and investors.
Is enough being done to promote heat pumps as a mature and efficient heating solution, and to ensure that the construction industry has the necessary skills to meet market demand.
An 80-95% decarbonisation of the energy system is foreseen for 2050. Considering, that this will be difficult in a number of sectors, it should result in much stronger efforts in those, where solutions are readily available – the heating and cooling sector being one.
The strictest efficiency requirements and a minimum RES share should be set in residential and non-residential buildings, the use of fossil energy carriers in systems with primary energy efficiency below 100% should no longer be allowed, let alone be subsidised.
Energy efficiency, the use of waste heat and renewable sources should become state of the art in planning and renovation action in industry.
Many European governments could take more swift and decisive action to accelerate the decarbonisation of their respective heating and cooling sectors. Focusing on heat pumps would fast-track this development, make achieving current RES, EE and CO2 emission reduction targets easy and would make more ambitious targets realistic.
With regards to the skill set of the construction industry we do observe potential here. A heat pump market share of approx. 10% of annual boiler sales indicates that a large number of skilled planners and installers is helping the industry to grow today.
Heat pump market development would clearly benefit from an up-skilling of the vast majority of planners, architects and installers not yet conveniently familiar with the technology. This is a tremendous, but not impossible challenge.
Clear messages by policy makers on the importance of heat pumps for the energy system would help industry to make investment decisions, young people to take decisions on their careers (in heating and cooling) and end-consumers as well as industry to recognize and decide in favour of the technology.
I am optimistic that a future energy system will largely be based on heat pumps integrating renewable energy and leading to the necessary no-emissions future in heating and cooling.